Bluegreen Corporation Reports 2009 Third Quarter Financial Results
BOCA RATON, FL – November 9, 2009 – Bluegreen Corporation (NYSE: BXG) today announced financial results for the third quarter ended September 30, 2009. The company reported a 43 percent drop in earnings due partly to cutting prices of its community home sites during the third quarter.
Bluegreen’s net income was $3.9 million, or 13 cents a share, on revenue of $112.7 million in the third quarter, down from net income of $6.8 million, or 21 cents a share, on revenue of $179.8 million in the same period a year ago.
In the Resorts (timeshare/vacation ownership) segment, it looks like inhouse/reloads is the place to be these days with a higher percentage of sales made to existing owners during the third quarter of 2009 (57%) as compared to the third quarter of 2008 (49%). The company had 20 sales locations last year, compared to 20 as of the third quarter.
Lower Resorts sales during the third quarter of 2009 reflected the deliberate downsizing of the Company’s sales and marketing operations in connection with the Company’s strategic initiatives implemented in the fourth quarter of 2008. During the third quarter of 2009, Bluegreen operated 20 sales offices as compared to 29 sales offices in the third quarter of 2008.
Gross profit declined to 59% from 65% in the third quarter of 2008, representing the sale of high cost vacation ownership interests (VOIs), a result of a change in the mix of inventory sold and the relatively higher cost of VOIs reacquired in connection with consumer loan defaults on previously sold notes receivable.
Selling and marketing expenses as a percentage of gross sales of real estate in the third quarter of 2009 declined to 45% from 50% in the third quarter of 2008. Total Resorts operating expenses (2) also declined to 51% of gross sales of real estate from 55% in the same period one year ago, which also reflects a 44% reduction in Resorts general and administrative expenses. Bluegreen believes that these improvements primarily resulted from the implementation of the Company’s strategic initiatives, as well as reflect that a higher percentage of sales were to existing owners during the third quarter of 2009 (57%) as compared to the third quarter of 2008 (49%). Sales to existing owners generally involve lower marketing costs as compared to sales to new prospects.
Resorts operating profit was $18.0 million, or 25% of gross sales, as compared to $20.8 million, or 13% of gross sales, in the third quarter of 2008.
The number of owners in the Bluegreen Vacation Club increased to 167000 at September 30, 2009 from 164,000 at June 30, 2009. As expected, VOI sales transactions and tour flow declined reflecting the impact of the strategic initiatives; however, both total prospect conversion rates and new prospect conversion rates increased compared to the prior year period. Bluegreen believes this is a reflection of the quality of its products and services, the professionalism of its sales associates and its focus on what it believes to be its most efficient and effective marketing channels.
Delinquencies over 30 days on the total originated and serviced timeshare receivables portfolio at September 30, 2009 were 4.9% of approximately $825 million in receivables portfolio, compared to 4.9% of an approximately $846 million portfolio at June 30, 2009. The average annual default rate rose to 12.7% for the twelve months ended September 30, 2009 from 8.7% for the twelve months ended September 30, 2008. Although Bluegreen believes that the increase in the default rate is primarily a function of the growing unemployment rate in the United States, the Company expects that the performance of loans originated in 2009 will reflect its newly-implemented initiatives, which included new underwriting standards put in place in December 2008 and a focus on obtaining increased down payments at the time of sale.
John M. Maloney Jr., President and Chief Executive Officer of Bluegreen, commented, “The third quarter of 2009 marks approximately one year since we introduced strategic initiatives designed to materially reduce Resorts sales while increasing their associated profitability, preserving cash, and conserving availability under our receivables credit facilities, all steps taken in response to a significantly contracted commercial credit market and weak general economic conditions. While there is still much work to be done, we believe that our efforts are being validated based on a number of important metrics achieved during the third quarter of 2009. Although net income and Resorts operating profit were lower on a dollar basis compared to the third quarter of 2008, each rose as a percentage of sales compared to the prior year period, with Resorts operating profit nearly doubling to 25% during the third quarter of 2009. We are also generating new, cash revenue streams by marketing fee-based services to outside timeshare developers and others; these services utilize our core management, financial, sales and marketing, and operating abilities. During the third quarter of 2009, we sold $11.3 million of outside developer inventory and earned a sales and marketing commission of $7.0 million as compared to no such revenues in the third quarter of 2008. We are continuing to pursue additional fee-based services relationships.
“We also benefited from decreased cash requirements as a result of lower sales and marketing expenses, and reduced capital spending for inventory and fixed assets. We realized — either at closing or within thirty days – 42% of our Resorts sales in cash during the third quarter of 2009, up significantly from 22% during the same period last year.”
He continued, “During this process, we have continued to focus on the customer to ensure their continued satisfaction with the Bluegreen Vacation Club. In measuring our success in this regard, we note that during the third quarter of 2009 our Resorts owner base increased, sales to existing owners rose as a percentage of sales, and average sales prices per transaction increased. New prospect conversion rates also improved compared to the same period in 2008. We continue to work with current and potential lenders to extend the maturities of our debt and to secure additional financing. We are also continuing to explore various potential alternatives to obtain new sources of liquidity. At September 30, 2009, our total cash position was $81.6 million and we had receivable-backed credit facilities with revolving capacity of up to $255.0 million with current availability of $52.5 million.”
To see the full financial report, including the financial tables, go to Bluegreen’s website.
Related posts:
- Bluegreen Corporation Reports 2011 Third Quarter Financial Results
- Bluegreen Corporation Reports 2010 Third Quarter Financial Results
- Bluegreen Corporation Reports 2010 Second Quarter Financial Results
- Bluegreen Corporation Reports 2010 First Quarter Financial Results
- Bluegreen Corporation Reports 2009 Fourth Quarter and Full Year Financial Results
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